Fix and flip homes with a rehab strategy or hold on to rental properties for a flow of passive income—it's up to you! But be sure to pay close attention to the rules regarding disqualified persons and prohibited transactions to avoid Real Estate IRA penalties.
When buying residential real estate, research the seller or auctioneer and consider all of the variables involved in managing your new asset. Examples of due diligence include walking the property, researching its claims history, confirming the quality of tenants past and present, and reading all documents associated with the property, such as leases, HOA (Homeowner's Association) documents, and insurance policies.
As the IRA holder, you cannot be the property manager, nor can you perform the maintenance on the property. Review our section on Property Management for information on how to navigate the day-to-day operations of owning residential real estate.
Because the IRA is the owner of the real estate, not the IRA holder, all purchase and maintenance costs are paid by the IRA, and all income (e.g., rent) goes back to the IRA. You must use IRA funds to address any maintenance costs or other expenses related to the property. For more information, see Income and Expenses.
"I have just finished purchasing a second fourplex using my IRA funds. This could not have been done without the professionalism of Irene Vann. Because this was such a challenging purchase, I want to especially commend Irene for a job well done...read more